A new report from an independent auditor has found that a Vermont State Police trooper who was sent to jail last fall for filing fraudulent timesheets was a lone actor.
Keith Flynn, the commissioner of the Department of Public Safety, said the report reinforced his belief “that 99 percent of [the department’s] employees are hardworking people, doing their best to get the job done and they do an honest job of reporting of what the job is.”
“As a manager, I have to trust employees, but I also have to verify,” Flynn said.
The $100,000 study, commissioned by the State Auditor’s Office under former auditor Tom Salmon, shows that there were no other employees in the Department of Public Safety who were engaged in the same degree of timesheet fraud. StoneTurn Group, a global, independent forensic accounting firm, was hired to determine whether there was widespread fraud and abuse of overtime among state law enforcement officials. The company used forensic data analytics — “algorithms and analyses of data to identify indicators of fraud, waste or abuse.”
The study also determined that the Department of Public Safety did not have adequate internal controls “across the process of approving, reporting, processing and monitoring overtime” to prevent fraud, waste and abuse. StoneTurn gave the state a list of recommendations for tightening oversight of employee reporting.
The Deeghan case precipitated the forensic audit. Former Sgt. James Deeghan was convicted of overstated his overtime hours over a 17-month period from 2010 through 2012 to the tune of more than $200,000, all of which he must repay. Deeghan overstated his time spent in Jericho, a town that contracted with the state police for coverage. Though there were 33 troopers who recorded time on patrol for the town, according to the report, Deeghan’s overtime accounted for 31 percent of total cost for the Jericho project. The trooper issued faked traffic tickets and fabricated accidents to justify the overtime.
Gov. Peter Shumlin held several press conferences last summer to address the Deeghan overtime fraud case. Shumlin asked the Vermont State Police to conduct an internal investigation, and he called for an external audit. On Monday, the governor declined to comment on the results of the report.
The 34-page analysis shows that 85 percent of the department’s 800 employees were at very low risk of abusing the overtime system. Sixteen individuals showed patterns of overtime use that the department has investigated. Flynn says the timesheets for these employees were checked against the Spillman system, which records law enforcement activities. None of those who showed high overtime rates had committed fraud, the commissioner said.
Ninety-five individuals, or about 12 percent of the workforce, exceeded the average overtime percentage total by more than 50 percent, the analysts wrote. The cost? $1.5 million or 13 percent of the $11.5 million of overtime for Jan. 1, 2010, to Sept. 30, 2012, the period of inquiry.
StoneTurn found that about 88 individuals reduced overtime levels by 20 percent after the governor’s announcement about the criminal investigation into Deeghan’s case. Flynn says the department is still drilling down into those numbers to determine whether there are any patterns of abuse.
The authors of the report wrote that state’s timesheet reporting system “is subject to human error or manipulation because payroll review and processing are largely manual and heavily reliant upon a small number of key individuals.” In addition, they found that supervisors “rubber stamp” time reports and “perform inadequate review.”
The fact that troopers can “self-activate” on-duty status by simply calling in to dispatch is another problem the auditors fingered.
This is a difficult problem for the department to resolve, Flynn said.
“A lot of our overtime is reactive,” Flynn said. Officers are often called in for emergencies at the end of a shift. “Those are things that are inherent with the job, but having said that it’s still important to make sure we have the appropriate supervisory controls and that overtime is monitored, confirmed and addressed with the employee through management verification.”
Higher level officers tend to log more overtime than their younger, less experienced counterparts who earn less, according to the study. Flynn says that’s because the department has two types of overtime — expected and unexpected. More experienced troopers tend to volunteer for expected overtime more often than younger officers, he said. Expected overtime includes contracts with grant programs, town patrols, utility companies and the Department of Homeland Security; unexpected overtime is logged in response to emergency calls. The Vermont State Police provide public safety services for 200 towns, or about 50 percent of the state’s population.
Unexpected overtime is inevitable, he said, given the nature of police work. The state troopers provide coverage for two shifts. For years, state officials have weighed the cost of overtime against hiring a third shift, but have repeatedly determined that 24/7 coverage is too expensive.
It is third-party contracts with towns and federal agencies that are most vulnerable to overtime fraud, StoneTurn determined, as became evident in the Deeghan case.
StoneTurn made the following recommendations to the department:
• Eliminate use of electronic signatures for supervisors
• Require routine reports on overtime
• Randomly audit overtime
• Move to an electronic timekeeping system
• Create formal documentation for payroll
• Review overtime budget and performance
Flynn says the department has already implemented many of these internal controls, including the elimination of the electronic signatures. Employees will be trained to use a new electronic timesheet system in the next few weeks, he said. The state has used a manual time reporting system.
“The vulnerability pointed out in the report are things we need to look at,” Flynn said. “We implemented a great number of the recommendations already. … We’re going to look at the data and records of people at higher risk, which in many cases was already done in our three-month audit of the entire state police force.”
In the future, the State Auditor’s Office will be able to use data analytics to track future patterns of fraud, waste and abuse.
The Department of Public Safety’s annual budget last year was $96 million. The proposal for fiscal year 2014 is $111 million.
